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The U.S. Department of Justice and the Federal Trade Commission recently updated their Horizontal Merger Guidelines, (1) which build upon and replace the 1992 Guidelines. (2) The revised Guidelines are [...]

Mergers involving rival firms in concentrated markets tend to increase opportunities for coordinated behavior. (1) This phenomenon is a longstanding focus of attention for merger control policy. (2) The Horizontal [...]

I. INTRODUCTION In the last few years, applications of the critical loss methodology have been harshly criticized by a collection of economists, some academics, some consultants, some government regulators, and [...]

For many years, there has been substantial lack of uniformity with regard to worldwide accounting standards. This diversity of accounting principles has had many adverse ramifications, including a negative impact [...]

Many companies are having difficulty accounting for customer relationships under the Financial Accounting Standards Board's (FASB) new accounting rules for mergers and acquisitions--Statement of Financial Accounting Standards (SFAS) No. 141, [...]

2015 and 2016 mark the 30th anniversaries of the Delaware Supreme Court's landmark decisions in Unocal and Revlon, respectively. Those cases and their progeny called for enhanced scrutiny standards to [...]

The two US agencies enforcing corporate governance standards, the Federal Trade Commission and the Department of Justice, give the doctrine that merger leads to efficiency as a reason to approve otherwise anticompetitive combinations. The idea of an 'efficient monopoly', is, however, an oxymoron, since monopoly is the root cause of inefficiency, as no less an authority than Adam Smith has stated.

James F. Rill, assistant attorney general in the Antitrust Division of the US Department of Justice, focuses his discussion on the 1992 Horizontal Merger Guidelines, which were issued jointly by the Department of Justice and the Federal Trade Commission, which means that the two federal agencies responsible for merger enforcement are on record as applying the same standards. The Guidelines comprise five steps designed to determine whether a merger will be pro- or anti-competitive. The new treatment of entry is one of the most significant aspects.

The 1992 Merger Guidelines are more analytical than the 1982 and 1984 versions and should provide more complete guidance for adjudications before agencies and the courts. The structure of the 1992 guidelines focuses on the reason for the guidelines, determining whether a proposed merger would be anticompetitive, and analyses the various issues in terms of their competitive impact. Applying the Guidelines may be easier because of the greater logical flow and connections made among the various issues.

The recessionary economic climate of the early 1990s presents merger analysis with the added question of how to deal with assertions of a firm's financial weakness. Horizontal mergers are occurring to meet the challenges of difficult economic times: swift technological change, interdependent global markets and a slow emergence from a long recession. Many mergers with concentration levels of concern to antitrust enforcers are occurring because firms believe they are the only road to long-term survival. Enforcers must consider these economic challenges when deciding if a merger must be stopped.

The 1992 horizontal merger guidelines give a more sophisticated framework for analyzing the role of entry and to what degree it would detract from the anticompetitive effects of a merger than the 1984 guidelines. The new guidelines differentiate between 'committed' and 'uncommitted' entry. Uncommitted firms enter a market in response to a short-term chance for profit; committed firms enter for the long term. Short-term entry will probably not be profitable if the sunk costs could not be recouped in one year and such a firm would not qualify as an uncommitted entrant.

The 1992 horizontal merger guidelines have both pros and cons. The pros are the slightly increased sympathy for the efficiency defense, the new section on single-firm market power and its anti-competitive potential, and the more detailed definition of entry. The cons are the overly cautious changes in relevant market analysis, the concept of 'sunk costs' which may make supply substitution or geographic diversion more difficult to use as a defense to a merger, and the added precondition for the failing company defense.

The goal of the 1992 horizontal merger guidelines is to identify mergers with the potential for creating or augmenting market power. They follow the 1982 guidelines in the view that market concentration is the most important factor in assessing the competitive effects of a merger and that high concentration is more worrisome than low. The new guidelines describe in greater detail how a merger could result in higher prices or other anti-competitive practices.

The European Economic Community (EEC) Merger Control Regulation took effect on Sep 21, 1990 and is the EEC's first complete system of merger control. The regulation gives thresholds for determining concentration, and, if such exists, how to evaluate its effect on the common market. The Merger Regulation also has provisions for the treatment of joint ventures. It differentiates between 'cooperative' and 'concentrative' joint ventures.

The courts have consistently shown a willingness to consider the Department of Justice's Merger Guidelines since their first promulgation in 1968, although they have not accorded them the force of law. The guidelines are useful to the business world in analyzing the legality of the business decisions they are contemplating. Ease of entry and the analysis of anticompetitive conduct are two aspects of the guidelines which need additional clarification. More than 75 cases and 28 requests for preliminary injunctions have based some of their arguments on the guidelines.

The National Assn of Attorneys General, with a membership of state and regional officials, adopted Horizontal Merger Guidelines on Mar 10, 1987, delineating enforcement policy on horizontal mergers. The guidelines lack the force of law, but are based on Section 7 of the Clayton Act. Their main purpose is to prevent companies from attaining market power. Mergers are held to facilitate the exercise of this power, so the guidelines deal with the competitive results of mergers. They differ in several respects from the 1984 Merger Guidelines of the US Department of Justice.

What were once the Big Eight accounting firms have merged into what some call the 'Final Four.' Small and mid-level firms are following suit, and merging at an ever-increasing pace. [...]

Byline: Melanie Evans New accounting standards go into effect this month that will significantly change how not-for-profit hospitals and health systems report mergers and acquisitions on their financial statements. Issued [...]

Byline: Gregg Blesch While the president and his allies in Congress attempt to remake the healthcare landscape, the president's antitrust enforcers are contemplating the first substantial rewrite of their guidebook [...]

Byline: Editorial Staff M&A GUIDELINES IN LIMBO The U.S. Department of Justice and the Federal Trade Commission will solicit public comment and host discussions as they jointly consider making changes [...]

M&A EXECS DON'T LIKE RULE CHANGES Dealmaking executives are concerned about new rules thrust upon them by the Financial Accounting Standards Board, a recent Deloitte survey declares. Since the SFAS [...]

Byline: Morris Hollander New standards effective at the beginning of 2009 will impact the accounting for mergers and acquisitions. The last time the standards were changed, in 2001, the changes [...]

The IASB has received mixed feedback on its proposal for public comment to help accountants distinguish between the purchase of a business and a routine purchase of groups of assets. [...]

Byline: Gavin Hinks Fair value model fuels controversy The first proposals for a converged standard from the International Accounting Standards Board and its US counterpart FASB will be accounting for [...]

Quick question: Who (or what) are FASB and GAAP and what do they have to do with the insurance brokerage mergers and acquisitions world? If your best guess involves a [...]